Friday, August 14, 2015

For better or worse?

Three recent news items and blog posts make a provocative contrast:

Paul Krugman, New York Times,  "The MIT Gang"
It’s actually surprising how little media attention has been given to the dominance of M.I.T.-trained economists in policy positions and policy discourse.... 
James Bartholomew, The Spectator, "British economics graduates have left a trail of misery around the world"
"... the trendy doctrines of our universities have much to answer for" 
(A list that in terms of needless human suffering, is pretty astounding)

Yannis Palaiologos, Politico, Beware of American econ professors!  
World-famous economists — men of Nobel prizes and stellar academic accomplishment — have provided intellectual cover to radicals who appeared at best to be willing to take a stupendously reckless gamble with Greece’s financial, political and geopolitical future, 
To belabor the obvious: Be careful what you wish for.

It is indeed surprising that  little media attention has been given to the dominance of economists trained at MIT in the 1970s in policy positions in US and international organizations.  If a similar dominance from, say, Chicago, or skull and bones, were noticed under a Republican administration and center-right european politics, the media would likely be full of a vast nepotistic right-wing conspiracy.

And given just how much popular opinion thinks of current economic management, it is surprising that Krugman wants more attention to that fact. If the media were to give proper attention, it's not clear they wouldn't write stories like spectator and politico!

Just because politicians find your advice useful, temporarily, doesn't mean you're right. The Spectator article offers chilling counterexamples.


12 comments:

  1. John,

    https://en.wikipedia.org/wiki/Stanley_Fischer

    Notable students:
    Ben Bernanke
    Greg Mankiw
    Mario Draghi

    Also, is MIT considered an apolitical center where schools like Berkley, Princeton, Harvard are left leaning while schools like Columbia, Carnegie Mellon, and Chicago are right leaning?

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    1. "Left" and "right" doesn't describe economics well. Most of what you would call "right" are pretty libertarian, and most of what you would call "left" are pretty free trade. Departments are pretty a-political also. I went to Berkeley. Economists find all sorts of little things to fight about like "structural" vs. "natural experiment" or linearized vs nonlinear models, or even computation methods, so we don't really divide into the rather incoherent ideological camps that divide the rest of the body politic. At least until economists aspire to government jobs.

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  2. Arnold Kling's thoughts on MIT and its impact on the profession: http://www.econlib.org/library/Columns/y2015/Klingmit.html

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  3. The article about British Universities misses (surprisingly) Manmohan Singh ( perhaps because his case does not support the core thesis of the article.), and BR Shenoy.

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  4. Thankfully the US (and its market monetarist test), the Tories in the UK and even the Greeks ultimately did not follow disastrous paleo Keynesian advice.

    Krugman really wants more focus on that?

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  5. There are plenty of studies of the political views of economists, including their voter registration, showing that the average economist is a moderate Democrat with an above inch average interest in income redistribution.

    Dan Klein title one of his studies Is there a Republican in the house?

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    1. The fact that academics tend to have leftist preferences has absolutely nothing to do with any economic support to leftist policies. For example, scientists can believe in god regardless of the lack of scientific proof of his existence.

      There is a high correlation between being a leftist and avoiding the corporate world (e.g., being an academic, actor, historian, hippie, etc). So you should not be surprised by this majority. Even among economists (that should know better).

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  6. A little surprised by your linking to the Spectator article. Yes, surely a lot of harm has come from people who graduated from British universities, but so what? A lot of good has from people in the exact same situation, from prime ministers down. Similarly, yes, British universities have exposed a lot of it's students to bad ideas, including students who went on to become very important, but they've also exposed them to so good ideas, of which both types have been put in practice in the past.

    The article only provides a choice selection of some particularly bad cases without being systematic in way, so I fail to see what conclusion we can take from it that isn't the obvious trivial that bad people can graduate from British universities (which is true of any university) and that British universities have expounded bad ideas to important people and will probably do so in the future (again, true of all universities).

    Having re-read what I've just written, my apologies if my tone is somewhat flippant, it wasn't intended, I guess I'm just curious as to the insight that you feel the Spectator article provides that wasn't, at least to my eyes, fairly obvious.

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  7. An historically short-sighted view. The prize goes to the University of Berlin, alma mater of Karl Marx. It's hard to think of a school of thought that has created so much misery without having a priesthood.

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  8. Great post John. I've never been a fan of Krugman's lack of modesty. Of course he thinks MIT's dominance reflects the natural order of things; 'the way it should be'. But of course when it comes to the 1% per cent, that's a different matter.

    MIT has not got any achievements in terms of good policy outcomes from their theories to boast about. But they have a lot to answer for. When it came to the 2008 financial crisis, it was 80 year old the-Cambridge-across-the pond theory that people actually drew on.

    If we are going to macro-economics back on track, essentially we will have to go back to where it was before Robert Samuelson. Analysis built on putting together the pieces from historical and observable fact will be where ultimately where we will have to return. It will start looking like a real science again.

    The best work with the biggest real insight since Keynes was Friedman's 'A Monetary History', which was exactly that.

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  9. Robert John CochraneAugust 19, 2015 at 2:25 AM

    Prof Charles Handy the Oxford Prof who after spending a life as an exec in Royal Dutch Shell, took on a Chair in Management, at Oxford. His publications in respect to sustaiable capitalism, and sustaiable labor relations, eg The Age of Paradox and The Empty Raincoat are a wonderful example of great work coming from UK Universities

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